How ASML (ASML Holding N.V.) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a semiconductor equipment leader like ASML makes money is essential for investors and anyone interested in the business of advanced technology manufacturing. In this post, we break down ASML's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick ASML Overview

ASML operates as the world’s leading supplier of photolithography systems for the semiconductor industry, providing the critical equipment used in the manufacturing of advanced microchips. Revenue comes primarily from the sale of cutting-edge lithography systems and ongoing service and field options that support chipmakers worldwide. The business is structured around two main segments: Net System Sales (the sale of new machines) and Service & Field Options (maintenance, upgrades, and support).

Revenue Breakdown

• Total Revenue (Q3 2025): $8.79B (+0.7% YoY)
  • Net System Sales Revenue: $6.49B (73.9% of total)
  • Service and Field Option Revenue: $2.29B (26.1% of total)
  • Growth is powered by strong demand for advanced EUV lithography systems and robust expansion in service contracts, with service revenue growing 27.3% YoY even as system sales declined 6.3% YoY.

Gross Profit and Margins

• Gross Profit: $4.54B (51.6% gross margin)
  • Cost of Revenue: $4.25B (-1.0% YoY)
  • ASML maintains robust margins due to its dominant position in EUV lithography, high-value proprietary technology, and operational efficiencies.
• Most costs come from manufacturing advanced equipment, sourcing precision components, and supporting a global service infrastructure.

Operating Income and Expenses

• Operating Income: $2.89B (+11% YoY, 32.8% margin)
• Operating Expenses: $1.65B (+4.4% YoY)
  • R&D: $1.30B (+5.1% YoY, 14.8% of revenue) — Focused on next-generation EUV/DUV systems, process control, and yield improvement technologies.
  • SG&A: $354M (+2.1% YoY, 4.0% of revenue) — Covers global sales, administrative support, and customer engagement.
  • ASML continues to prioritize innovation and invest in growth while maintaining efficiency in its operations.

Net Income

• Pre-Tax Income: $3.00B (+5.2% YoY, 34.1% margin)
• Income Tax: $517M (17.2% effective tax rate)
• Net Income: $2.48B (+2.3% YoY, 28.3% net margin)
• ASML converts a significant portion of sales into profit due to its scalable business model, technological leadership, and pricing power.

What Drives ASML's Money Machine?

• Net System Sales: 74% of revenue comes from the sale of advanced lithography systems, especially EUV platforms that are essential for leading-edge chip production.
• Service and Field Options: Service revenue grew 27.3% YoY, reflecting the expanding installed base and recurring maintenance/upgrade contracts.
• R&D Investment: $1.3B invested in Q3 2025, ensuring ASML remains at the forefront of semiconductor manufacturing technology.
• Future Growth Areas: High-NA EUV systems and holistic lithography solutions are strategic bets for future growth, though not yet fully profitable.

Visualizing ASML's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially R&D) taking the largest chunk.
• Even after large investments in innovation, 28.3% of revenue drops to the bottom line.

Key Takeaways

• ASML's money comes overwhelmingly from advanced lithography system sales, with a fast-growing service business.
• High gross and net margins illustrate the power of ASML's technology-driven, high-barrier business model.
• Heavy investment in R&D, balanced by efficiency in operating costs.
• Ongoing growth is driven by chip industry demand for ever-smaller, more powerful semiconductors.

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FAQ About ASML's Income Statement

1. What is the main source of ASML's revenue in 2025?

ASML generates over 73% of its revenue from Net System Sales, primarily advanced lithography equipment. The remaining 26% comes from Service and Field Option contracts, which are growing rapidly.

2. How profitable is ASML in Q3 2025?

ASML reported net income of $2.48B in Q3 2025, with a net margin of approximately 28.3%, reflecting strong profitability driven by high-value technology sales and operational efficiency.

3. What are the largest expense categories for ASML?

The biggest expenses on ASML's income statement are operating expenses, particularly Research & Development (R&D) at $1.30B in Q3 2025, as ASML prioritizes next-generation lithography and process innovation. SG&A costs were $354M.

4. Why does the Service segment operate at a loss?

Service and Field Option revenue, despite generating $2.29B in Q3 2025, is subject to high initial investment in global support infrastructure and field upgrades. ASML invests aggressively in customer support and technology upgrades, believing these will drive long-term growth—even if the division is less profitable today.

5. How does ASML's effective tax rate compare to previous years?

ASML's effective tax rate in Q3 2025 was 17.2%, consistent with previous years. This moderate rate is primarily due to tax benefits from international structuring and R&D incentives.